Wages for American workers still look like they are about to go higher

In January, average hourly
wages grew 0.5% over the prior month, the biggest month-on-month
increasesince November
2008.

But the latest small
business optimism report from the National Federation of
Independent Businesses showed that the outlook for future wage
growth isn't quite as strong, though the trend is wages is still
higher.

Over the last several months,
economists have looked to the NFIB report as a key indicator for
future wage growth.

Following Tuesday's report, Ian
Shepherdson at Pantheon Macro said the outlook for wage growth is
still strong, writing that, "Expected worker comp fell by a hefty
5 points to 12, but actual comp was unchanged at an elevated
+25, consistent with wage growth in excess of 3%.
There's no tendency for the reported comp number to
lag expected comp; they trend together and the trend is
upwards."

Indications on the broader
labor market were also still strong in the report, which said:
"Twenty-six percent of all owners reported job
openings they could not fill in the current period, up 1
point and a very solid reading. The net percent of
owners planning to create new jobs gave up 1 point from
December’s excellent reading, providing evidence that the
December number was not a fluke. A net 14 percent
planning to create new jobs is a strong
reading."

Overall, however, Tuesday's
NFIB report was a bit disappointing, with the headline optimism
index retreating to 97.9 in January from 100.4 in the final month
of 2014.